1. The Impact of Compensation Laws will be the Story of 2024 – Compensation conversations and wage-related legislation will again dominate the trade headlines as the reality of aggressive new legislation impacts the industry. Half a million "fast-food" employees in California will see their hourly wages hiked to $20 starting April 1. Chicago's tipped workers will see raises starting in July as the Windy City starts a four-year city council-mandated phase-out of the tip credit. In New York, lawmakers delivered significant wage increases to delivery drivers in 2023. Just three examples of many wage-related developments across the country that will impact restaurants in 2024.
  2. Operators Deepen Reliance on Technology to Reduce Labor Costs – Restaurant operators will increase interest in and reliance on both front and back of the house technology, including artificial intelligence, to improve efficiency and reduce costs--especially labor costs. 2023 witnessed many high profile restaurant groups announcing significant technology-driven changes in their operating models, a trend that will gain additional momentum in 2024.
  3. Surcharge Scrutiny to Result in Menu Price Increases – The number of restaurants adding service charges to their customer bills has surged in recent years and hasn't let up. Many restaurants use the charges as an alternative to menu price increases, as operators battle higher food and labor costs. But legislators at the state and federal level (i.e., SB 478 in California and the Federal Trade Commission ("FTC")) have set their sights on eliminating/regulating surcharges and service fees. In order to avoid risk, expect many restaurants to abandon the use of such charges and simply raise menu prices.
  4. Joint Employer Liability Battle Rages On – The National Labor Relations Board (NLRB) issued its Final Rule in October 2023, establishing a new standard for determining whether two employers (as defined in the National Labor Relations Act) are "joint employers." Under the new standard set forth in the Final Rule (and explicitly rejecting the former standard), franchisors may be deemed to be joint employers, and jointly liable for the acts of its franchisees with respect to labor-related matters. Facing fierce opposition on multiple fronts, the effective date for the new rule has been extended to February 26, 2024.
  5. America's Beverage Obsession Hits a Ceiling – or Does It? – The number of beverage-centric concepts has exploded over the past several years, fueled by a seemingly insatiable American appetite for caffeine, sugar, and all things "energy." At the end of 2023, the world's largest restaurant group entered the market with a concept of its own. Given the rapid growth of this segment over the past few years, coupled with substantial new development in the pipeline, 2024 should shed light on whether the market is reaching the point of saturation or whether significant growth opportunity exists.

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